Catherine Williams, Esq.
On February 21, the National Labor Relations Board (NLRB) issued a decision, McLaren Macomb, 372 NLRB No. 58, making it more difficult for employers to include confidentiality and non-disparagement provisions in agreements with employees who are protected by Section 7 of the National Labor Relations Act (NLRA).
Overview of McLaren decision
In McLaren, the NLRB considered whether it was lawful for an employer to offer severance agreements with the following terms to employees who were being permanently furloughed:
- “Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.
- Nondisclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents, and representatives.”
(Dec. at 2.)
The agreements at issue did not contain any disclaimer or carve-out from these provisions stating that the provisions were not intended to cover protected activity, such as participating in an investigation by or disclosing information to the NLRB.
Overruling several decisions issued in 2020, the NLRB found that the employer violated Section 8(a)(1) of the NLRA by offering its employees agreements with these provisions, because the provisions were overbroad and “interfere[d] with, restrain[ed], or coerce[d] employees’ exercise of Section 7 rights.” (Dec. at 7.) The NLRB explained that Section 7 protects employees’ rights to “discuss[] terms and conditions of employment with coworkers” and to otherwise “engage in communications with a wide range of third parties in circumstances where the communication is related to an ongoing labor dispute and when the communication is not so disloyal, reckless, or maliciously untrue to lose the Act’s protection.” (Id. at 6.)
The NLRB found that the provisions here “substantially intefer[ed]” with these rights in several respects, including:
- The non-disclosure provision was broad enough to prevent employees from making any statement asserting that the company violated the NLRA.
- The non-disclosure provision did not provide a definition of “disparagement that cabins that term to its well-established NLRA definition under” Supreme Court precedent holding that Section 7 does not protect negative statements about an employer that are unrelated to labor practices or to wages, hours, or working conditions, or to statements that are “maliciously untrue.”
- The non-disparagement provision covered statements not only about the employer but also about related entities, officers, directors, employees, etc., and had no temporal limitation, which the NLRB found would chill “efforts to assist fellow employees” and “future cooperation with the Board’s investigation and litigation of unfair labor practices with regard to any matter arising under the NLRA at any time in the future.”
- The non-disparagement provision would also chill raising or assisting with complaints about employer with former employees, coworkers, Union, the Board, other agencies, the media, “or almost anyone else.”
(Dec. at 8.)
The NLRB also went beyond its previous decisions and expressly found unlawful the fact that the confidentiality provision at issue “prohibited the subject employee from discussing the terms of the severance agreement with his former coworkers who could find themselves in a similar predicament facing the decision whether to accept a severance agreement,” or with the union representing other such employees. (Dec. at 9 (emphasis added).) The NLRB also stated even more broadly that “[a] severance agreement is unlawful if it precludes an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, about his employment.” (Id.)
Next steps for employers In light of the McLaren decision, employers should carefully review the agreements they offer to employees who are protected by Section 7—which does not cover individuals who qualify as “supervisors” under the NLRA, and also does not cover independent contractors—and consider whether any confidentiality or non-disparagement provisions should be narrowed or removed, and/or whether any disclaimers or carve-outs permitting employees to engage in protected activity should be expanded. In particular, employers should be aware that for the first time, the NLRB has placed limits on employers’ ability to keep confidential the terms of severance agreements (including potentially the amount of the severance) offered to employees who are protected by Section 7. While the McLaren case involved a separation agreement, employers must also consider the impact of this decision on settlement agreements, employment agreements, restrictive covenant agreements or any agreements that contain confidentiality and/or non-disparagement provisions.
If you need assistance reviewing relevant agreements to ensure compliance with this new NLRB case, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.
